Case Studies

Case Holder:
Pakiza Dairy Company

Contact details

Email: info@pakizadairy.com

Website: www.pakizadairy.com

Dairy Market Linkage – rural milk producers and dairy company

Promotion of Youth Employment in Fragile Settings

Background & Context

Constant conflict in Afghanistan has rendered the security situation precarious and with an obvious negative impact on the economic and investment climate. Despite reforms to the legal and regulatory framework, there are still serious shortcomings in terms of developing the private sector, which is not yet sufficiently competitive. Years of warfare have meant that successive regimes have struggles to govern centrally and are often impotent, largely due to the lack of a tax base or a legitimate indigenous source of revenue.

One of the greatest challenges is to create jobs and/or business opportunities for the nearly 400,000 people entering the labour market each year. Approximately half of the Afghan population is underemployed or unemployed, and the lack of work particularly affects women. The participation of women in the labour force is low – only 29 percent of women are economically active (consequently women headed households are the poorest in the world) and around 66 percent of this female labour force is engaged in agriculture and 24 percent in manufacturing.

The R2J project has established two milk collection centres (MCC) in the villages of Khala bachagan and Taligak. The Khalabachagan MCC covers 10 surrounding villages and the Taligak MCC 9 villages. These centres collect farmer’s fresh milk on a daily basis, which is then bought (around 650 kgs per day) by the Pakiza Livestock and Dairy Production Company.

Milk Collection Centres give farmers the opportunity to sell their milk to factories who then process the milk into dairy products. Factories can also train the farmers in the best dairy production methods to ensure a high quality supply of milk.

A total of 1,500 female farmers in the 19 villages have been trained by Pakiza in cattle management and another 750 have been trained in Qaraghujla and surrounding villages, where the Pakiza company have set up a third MCC.

Livestock keeping is an important element of the Afghanistan economy both for home consumption and the sale at market of dairy products like yoghurt and cheese. For rural populations, the increase in milk production for sale and home consumption is seen by many farmers as an important development opportunity. Increased milk production can primarily be achieved by increasing animal productivity through better feeding and management, improved genetic potential of the cattle and good animal health. For dairy development, establishment of efficient marketing facilities is another important prerequisite. The strong internal demand for the dairy products provides a good basis for a viable commercial dairy sector and dairy is a key source of household income and an excellent instrument to increase the incomes of rural women.

Most industrially processed and packaged dairy products are however imported. Many regions in Afghanistan have a well-established dairy production tradition, particularly in yogurt, but lack the infrastructure to expand beyond local consumption. Investment in the dairy value chain could boost incomes and create jobs in the dairy sector.

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The Problem

Most of the 3,600 dairy farmers in Dawlatabad district are poor. Despite producing a total of 40,000 litres of milk, the lack of cold-chain facilities and village-level milk collection centres means there is no access to markets and most milk is spoilt, given away for free or discarded. Working conditions, particularly for women, are often dirty and labour intensive, with little or no income for women. Some milk produced is processed into Chaka ( yoghurt) and sold at local markets. The woman who process this Chaka are usually unpaid by their husbands/fathers, who sell the Chaka in district markets.

“…it has always been a dream for farmers to sell their milk but due to absence of market no one was able to sell fresh milk…”

Objective

In order to link milk producers of rural villages of Dawlatabad to market, the R2J project designed and implemented an intervention to train and link the milk producers of Dawlatabad district with the Pakiza Livestock and Dairy Production Company. The company would train the farmers and offer a reasonable price to the milk producers. Two milk collection centres would be established and milk collectors assigned to buy the milk from farmers. This would then be transported to Mazar i Sharif and processed by the company. Ensuring a supply of good quality milk to boost the production of dairy products was a strong incentive to Pakiza to invest in training and collection centres.

Value Proposition & Activities

As well as buying the collected milk, the company has trained a total of 1,500 female farmers in cattle management which covers topics such as: different cow breeds and selection, raising dairy cows, fertilization, pre-and post-delivery hygiene, milking safely, fodder, silage, diseases, vaccines and treatments. Farmers were organized in classes of 25 to 30 and received training in both theory and practice. Illustrative materials such as video, images and signboards were used for theory sessions.

Learning & Results

The intervention has achieved remarkable results. Approximately 500 farmers actively sell milk through the MCCs and the cooperative. 73% of these farmers had no previous access to markets at all. Women particularly have benefited from the initiative to sell milk via the collection centres and Women farmers have been trained and have increased their income as a result. Women farmers are also part of the cooperative, previously inactive but which has now grown to 100 members. These cooperatives have seen that collecting and selling milk is a business opportunity. Supporting the cooperative was not an initial part of the project but Pakiza have trained its members so they might become part of the value chain.

The Pakiza Company increased their sales of processed milk products by 21% in one year. After the success of the two MCC points in the Dawlatabad district the company has now invested in the construction of the third MCC entirely on its own and has business plans to add new business lines: chocolate, watery yogurt and ice-cream, for which they plan to train and work with 50 new female processors. Due to the success in reaching a higher quality, Pakiza is now in the process of gaining a HACCP – Hazard Analysis and Critical Control Points (HACCP) Certification. The company and the farmers have earned $54,129 as extra net income during one year . 365 farmers have improved their income situation and 14 new full-time jobs were created in Pakiza.

Due to the cattle management training the rejection rate at the MCC has been reduced by 75%. Main reasons for rejection were the watering down and mixing of evening with morning milk. The training has resulted in spoilage being reduced and increased hygiene and cleanliness; milk is not kept in warm places or open dishes and the area around the animals is kept cleaner.

Conclusion & any future variation

The intervention has been successful, as producers who have access to the MCCs responded to the R2J survey with rates of 75% highly satisfied and 25% satisfied. Farmers are now receiving 5 AFN more per kilo while the cost for processing is cut. A total of 1400 households have benefited. Women farmers are now paid for their produce as well as improving their cattle management/rearing knowledge and 7 jobs have been created in the MCCs and Cooperatives. The main challenge for the future is accessibility and awareness; at present there are two milk collectors in Khala Bachagan MCC and two in Taligak MCC . They collect from five villages in total at present and the challenge remains to assign further milk collectors, with at least one assigned to each village, so that other villages can access the MCCS. Farmers may have too far to travel or may have too little milk to sell; more collectors could resolve this. These collectors should also be available during the day as if they buy milk only in the early morning they have left before farmers in outlying villages can arrive.

In terms of book-keeping, each farmer should have a unique ID/serial number and a personal pass book keeping record of milk received and payments. Farmers income does need to be increased, as the Pakiza company buys milk for 21 AFN per kilo and the MCC pays 17 AFN or lower. High temperatures in the summer months mean that milk has been rejected by Pakiza Company as it has spoiled during the 3 hour journey ( it is transported by motorbike from the MCC to the company). Investment by the MCCs in a chiller or solar freezer would reduce spoilage; further interventions may seek to resolve this issue.